Much of the U.S. economy is tightening up following the deflation of the home mortgage market. But IBM channel partners are celebrating the one-year anniversary of IBM Global Financing's Flexible Credit program, which they said has helped slash credit-approval times and close deals more quickly.

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Launched last year to make it easier for resellers to quickly access loans for up to $500,000, the IBM credit program has approved credit lines for approximately 600 value-added resellers (VARs), most of them small and medium-sized businesses (SMBs). The deals typically involve short-term loans to the VAR of between $200,000 and $300,000 to help purchase equipment, pay for up-front services or fund other aspects of a business.

Although figures for November show that IBM has approved approximately $175 million in loans, executives still believe they will reach the IBM credit program's original goal and approve $1 billion over three years, according to Ron Bachner, business development executive at IBM Global Financing. Bachner said he expects the first-year credit figures to total between $185 million and $190 million, which is about the total IBM expected during the first year of the program. In Canada, where the IBM credit program was launched in October, the company has already approved $1.4 million, Bachner said.

"If I have a credit line of $300,000, that is really more like $600,000 because I can turn that money. I can borrow that amount, pay it down and borrow on it again and I can float my money longer," said John Waltz , president of Forward Edge LLC, a Cincinnati-based reseller of PCs and network equipment.

Waltz also said there's a stark difference between the relationship his company has with the commercial bank it established ties with when it opened three years ago, and its bond with IBM Global Financing.

"I had to fight to get my commercial bank to give me a credit line of $250,000, and that's after a three-years relationship. I've only signed up with IBM's Flexible Credit program for a couple of months, and right off the bat I got a credit line of $200,000 and that's now been extended to $300,000," Waltz said.

Dave Sevigny, president of Lexington, Ky.- basedDMD Data Systems Inc., said, "Anything that takes two minutes to give you $500,000 is good ."

Sevigny said the loan facility lets VARs have a different planning and sales strategy toward customers.

"It frees your ability to not have to manipulate deals as much in order to get your cash flow to work out right. Without a program that allows you to buy technology, VARs will tell their customers don't buy that just yet. They manipulate the deal around their credit line," Sevigny said.

Frank Picarello, vice president of strategic business ventures at Redwood City, Calif.-based reseller All Covered Inc., said the credit facility enables his company to help customers better manage their financing.

Picarello also said many projects that take fewer than 60 days to complete can be handled without asking a customer to pay up-front costs because the IBM credit program has interest-free loans for up to 90 days. That means project approvals are faster as well.

"In the past, without a facility like this, we would never entertain a $200,000 project with a client unless they were going to pay a big portion of that up front," Picarello said. "Now we entertain larger deals with our client without exposing our cash flow between us and our distributor."

Scott Tillesen, director of SMB Credit at Clearwater, Fla.-based distributor Tech Data Corp., said 165 of Tech Data's channel partners are enrolled in the IBM credit program, which represents a significant increase in the number of VARs that have this kind of financing, but he added that more VARs need to tap into this facility. At the outset, Tech Data piloted the IBM credit program to encourage its channel partners to apply for loans.

"A lot of our resellers are trying to get by without having a bank loan or a banking relationship. The bigger task is to educate those thousands of VARs out there that should have it who just have not learned the lesson yet of the advantages of having this supplemental financing. Even if it's supplemental, they should have it," Tillesen added.

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